Organic volume, which excludes the effect of acquisitions
and disposals, dropped 0.3 percent, the Leuven, Belgium-based
company said today, missing the median estimate of six analysts
for a 2 percent increase. Sales of more expensive beers enabled
the brewer to boost total revenue more than estimated.

The maker of Budweiser said the pace of volume growth in
Brazil, one of its biggest regions, slowed from the second
quarter and its dominant share of the market shrank about 1.1
percentage points from a year earlier as it increased prices to
coincide with a proposed tax increase. The quantity of beer sold
in Europe declined, led by a 17 percent drop in Russia amid a
“declining industry and challenging regulatory environment.”

Today’s results are “a mixed bag,” Jonathan Fyfe, an
analyst at Mirabaud Securities LLP in London, wrote in a note.

So-called normalized earnings before interest, tax,
amortization and depreciation rose 0.3 percent to $3.98 billion.
On an organic basis, that was an increase of 11 percent,
compared with the median analyst estimate of 8.7 percent growth.

Shares Decline

Normalized earnings per share rose to $1.17 from $1.09 in
the quarter, missing the $1.21 median estimate, because of
higher-than-expected finance charges, according to Anthony
Bucalo, an analyst at Banco Santander SA in London.

AB InBev shares slid as much as 1.5 percent, and traded
down 0.9 percent at 65.71 euros as of 11:42 a.m. in Brussels.
They had risen 40 percent this year before today, outpacing
gains in competitors SABMiller Plc, Carlsberg A/S and Heineken
NV. Carlsberg, the owner of Russia’s biggest brewer, declined as
much as 3.8 percent to 487.50 kroner in Copenhagen today.

The unexpected decline in AB InBev’s volume followed a 0.1
percent drop in the second quarter after it adjusted the pace
and timing of deliveries in the U.S. to wholesalers.

Total organic sales rose 9.1 percent in the third quarter,
topping the median analyst estimate of 7.5 percent. Revenue rose
to $10.3 billion from $10.2 billion a year earlier.

Lime-A-Rita

In the U.S., the introduction of higher-priced products
such as Bud Light Platinum and Lime-A-Rita led to a 5.7 percent
gain in revenue per hectoliter, the company said. Increased
costs of marketing and distribution to support new products
meant normalized Ebitda as a percentage of sales shrank 2.22
percentage points to 42.2 percent in the North America region.

“We feel pleased about the performance in the U.S. and see
the brands moving in the right direction,” Felipe Dutra, AB
InBev’s chief financial officer, said on a call, even as the
performance of its Budweiser brand disappointed in the quarter.

Beer revenue per hectoliter rose 18 percent in Brazil after
the company brought forward price increases to the third quarter
from the fourth quarter. The decision followed a change in
excise taxes that was due to take effect on Oct. 1. Selling
volume in the country edged up 0.2 percent and should be higher
for the year as a whole, AB InBev said.

A partial postponement of the tax increase has led AB InBev
to scale back price increases for the remainder of 2012, it
said, adding that it anticipates beer-revenue-per-hectoliter
growth in the “high single-digits” in Brazil this year.

Modelo Acquisition

Volume fell 0.6 percent in western Europe and 14 percent in
central and eastern European on a “declining and challenging
regulatory environment, especially in Russia,” AB InBev said.
The brewer is “still committed” to Russia, although “we see
the industry declining this year, and we’re not too
optimistic,” Dutra said.

AB InBev expects to complete the $20 billion acquisition of
the rest of Mexican partner Grupo Modelo SAB in the first
quarter of 2013, Dutra said on the call. AB InBev shares fell
earlier this month after website TheCapitolForum reported that
the U.S. Department of Justice may want to block the deal.

“Given the size and profile of this transaction, I do
expect the DOJ to be very diligent on this analysis,” Dutra
said. “We believe the transaction should be approved.”

AB InBev sees revenue per hectoliter increasing ahead of
inflation, and expects the cost of sales to increase in “mid-single digits” as it mitigates rising commodity costs with more
efficient purchasing. Distribution costs and sales and marketing
investments will increase by “mid-to-high single digits.”